We build, calibrate and simulate a stylized energy-economy model designed to evaluate the magni-
tude of the carbon tax that would allow the French economy to divide its CO2 emissions by four at a
forty years horizon (Factor 4). We estimate the substitution possibilities between fossil energy use and
other factors on the households’  and firms’ sides. Two versions of the model are simulated, the first
one with exogenous technical progress, and the second one with an endogeneization of the direction
of technical progress. We show that if the energy-saving technical progress rate remains at its recent
historical value, the magnitude of the carbon tax is quite unrealistic. When the direction of technical
progress responds endogenously to economic incentives, it is possible to reduce CO2 emissions beyond
what sustitution possibilities would allow and to reach the Factor 4 objective, possibly at the expense
of the overall growth rate.